Elon Musk Responds To “False” LA Times Article On Tesla Funded By Govt Subsidies (w/video)


With the headline “Elon Musk’s growing empire is fueled by $4.9 billion in government subsidies“, the LA Times sparked a heated on-line, eh, discussion over Musk’s backing.  The story starts:

Los Angeles entrepreneur Elon Musk has built a multibillion-dollar fortune running companies that make electric cars, sell solar panels and launch rockets into spelace.

And he’s built those companies with the help of billions in government subsidies.


Musk and his companies’ investors enjoy most of the financial upside of the government support, while taxpayers shoulder the cost.

…and claiming the subsidies interfere with the viability and corporate self-sufficiency of Tesla, Solar City and generally any other company like Musk’s that receives them.

Musk begs to differ.

In an interview with CNBC, Musk states (fairly passionately, mind you) the subsidies are helpful, but not necessary.  The story goes on to say:

Musk said that the only incentives he bargained for directly were state-level incentives. These include a small launch site in Texas for SpaceX and a Tesla gigafactory in Nevada. He explained that such incentive packages have existed long before his companies received some of them.  

…and Musk makes a final point:

“The incentives that Tesla and SolarCity receive are a tiny, tiny, pittance compared to what the oil and gas industry receives every year,” he said.

Brian Thevenot, Deputy Business Editor at the Times is unrepentant:

“I’m actually surprised that he had such a sensitive reaction to this story because, really at its core, it’s basically a business strategy story that’s merely factual,” he said in an interview on CNBC’s “Closing Bell.”

“It paints a picture that I think Elon Musk would agree with, that his business strategy is to incubate high-risk, high-tech companies that promote green technology with the help of billions of dollars of government money,” he said.

Thevenot added that the point of the story was to report on the strategy and “let the public debate whether it is wrong or right.”

See (hear) the complete interview here:

Hat tip to Bob!

Category: Tesla

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62 responses to "Elon Musk Responds To “False” LA Times Article On Tesla Funded By Govt Subsidies (w/video)"
  1. Richard Harmon says:

    You don’t suppose that some oil company PR consultant helped write the LA-T article, do you?

    1. Anon says:

      The LA Times article mirrors what the anti-tesla Detroit rags have been trying to paint Musk as (a Selfish Subsidy Vulture) for some time now. The only difference is– people read the LA Times. 😉

      1. kdawg says:

        Why do you always try to drag Detroit through the mud?

        1. Nix says:

          Many of the Detroit news outlets drug themselves into the mud with their lousy, biased reporting on green cars. He’s just shining the light on their mud pit.

        2. Anon says:

          Because I know where the seeds to this “Story” were first sown / tested.

          Clearly, the Romney “Tesla is a Loser” meme didn’t play very long (Reality must suck for these people), so a new politicized angle was applied to Musk’s amazing business successes, was chosen as the ‘new color’ to re-paint him with.

          The new approach appears to negatively politicize green successes in an effort to reduce or stop green incentives, and slow the rate green tech companies are displacing older filthier technology– because clearly, the young people behind these noble goals, are really just self-serving money vultures. 😉

          Glad Musk’s defending himself in public and not letting ‘the media’ control the discussion about government’s important role in funding disruptive / green innovation and technology.

        3. David Stone says:

          Why do you have something against this?
          Especially if you are from there, you should join in, as angery as you be for being one of millions of victims of gross negligence and mismanagement by those in office.

    2. Mike777 says:

      I think your seeing another example of Paid-Advertizing fronting as news. This is clearly an Exxon funded piece.

      Another example of a monopoly Buying a News Story.
      Surprised it didn’t come from Fox.

      1. Anon says:

        GM has also had a hand in demonizing and actively lobbying against Tesla Motor’s, for some time now.

        I guess they got tired having only people in Michigan pay attention to them, so they took their message out of state…

        1. ModernMarvelFan says:

          Are you the offical “paid” GM critic on inside ev?

        2. ffbj says:

          Mary Barra dismissed 15 employees and overhauled safety procedures after a report commissioned by the auto maker found GM failed for more than a decade to recall the vehicles even amid internal evidence of the problem.

          As a result obfuscation, criminal negligence, and poor safety procedures over 100 people died. So with GM almost every criticism is deserved. If they improve fine, but it does not make up for their past sins.

          1. Big Solar says:


    3. jilljill says:

      I Bet that If Someone Succeeded in a Law suit Against One Of these Jerks & Their organizations, These GoofBalls Would Think Hard & Good And proceed With Caution, Before they write or Invoke False Information. Like that Goof That Purposely Drained the S’s Batteries By taking all The wrong Routes, As He was Being Tracked …..

  2. Governments would do well to invest more in Elon Musk, and less in Rex Tillerson.

    1. pjwood1 says:

      What did the Rand study say, something like “60 billion” in U.s. defense costs, policing the Straight of Hormuz?

    2. Mike777 says:

      The Oil monopoly has bought out the Republican party, slowing any possibility of really accelerating a clean, efficient future.

      You might notice, that Republicans block energy efficiency standards as well. The only thing they stand for is to literally make ExxonChevron richer. And nothing else.

      There’s no principle here, just pure greed. And you may also notice that has Repubs have gotten more whore like to oil also the smart Repubs have left the party. Only the dumb ones are still around, and they absolutely need oil money, they’re not qualified to get a real job in the private sector.

      1. ffbj says:

        Republican thought is to political thought, as military music is to music.

        1. Steven says:

          Thus speakith George Clemenseau.

          1. ffbj says:

            Correct. Nice spotting. The original quote:
            “Military justice is to justice as military music is to music.”

  3. scott franco the greedy republican says:

    “The incentives that Tesla and SolarCity receive are a tiny, tiny, pittance compared to what the oil and gas industry receives every year,” he said.

    Sad to see Elon is adding to the now standard myth of counting ordinary tax writeoffs for depreciation and the like that everyone gets as “subsidies”. Only in socialist doublespeak is letting people keep their own money (for whatever reason) a subsidy.

    1. Paul says:

      LOLL! 😉

    2. Fool Cells says:

      you should educate yourself on the subject before you speak more nonsense.


        1. Steven says:


          (Didn’t mean to leave you hanging)

      1. Steven says:


    3. Lensman says:

      I see you have both feet firmly planted in the Faux “New” bubble world, totally unconnected from reality.

    4. Alonso Perez says:

      But they aren’t ordinary write-offs. The oil industry gets special benefits. For example, thanks to the 2005 Energy Policy Act, they get 50% depreciation in one year for refinery investments. This isn’t normal business depreciation at all.

      Then there are the pipeline MLPs (Master Limited Partnerships), a special investment vehicle that allows pipeline operators to show a loss (again due to warp speed depreciation on assets), even as the pipeline generates cash flow.

      This is how the US taxpayer has actually been subsidizing Keystone XL, since it requires both pipeline construction and refinery investments to process Canadian bitumen.

      There are other mechanisms, such as recognition of foreign royalty payments as tax payments, Free Trade Zone benefits, the fact that much oil and gas exploitation is on Federal land and leasing terms are so favorable that oil companies don’t even need to exploit their leases unless they want to, etc.

      1. pjwood1 says:

        +1 I don’t know why Scott hangs around, to be so incendiary. Why not learn?

        If I’m a partner in a firm, I get to deduct its losses as an ‘active’ participant. If I invest in another’s firm, I am ‘passive’ by definition. Mkay? Along come oil & gas MLPs, where suddenly it’s like I’ve got overalls, and oily gloves. Thousands in annually lower tax liabilities, to me, for a pretty nominal investment. Think about it. The tax code permanently recognizes this, as wind and solar plead for the almost annual renewal of benefits, that don’t last.

        Scott, you don’t need to behave like the chastened Republican, of IEV. I’m sure you aren’t alone. When you make comments like this, you expose something else. That’s cool, because we get to go over it, all over again.

    5. Nix says:

      That’s pretty funny, because man of what the LA Times story called “subsidies” for Elon’s companies, are ALSO tax write-offs.

      It cracks me up when folks like you have no problem calling a tax write-off for anything green a “subsidy”, but the moment the tax write-off is for the oil industry, it suddenly isn’t a subsidy anymore!

      Stop kidding yourself.

      1. Lensman says:

        If we took the amount of money, the trillions of dollars, which the U.S. government has spent funding the military to protect our supply line of falsely “cheap” oil from the Mideast, and divided that cost by the number of gas- and diesel-powered cars currently licensed to operate on public roads in the USA, does anybody actually doubt that this subsidy would be far, far higher than the relative pittance given to subsidize “green” tech?

        It really astonishes me that people like Scott Franco would even raise the issue. It’s a stupendously losing argument for them, and you have to be pretty deep into hard-right-wing “bubble world” thinking to ignore that. Deep indeed!

    6. Nix says:

      In the 1 minute it took me to google search for a story on oil subsidies,the oil industry just got 10 Million more dollars in subsidies:


    7. Mike777 says:

      You mean the fact free Republican, which is actually the typical Republican. Hears something on Fox Fantasy and thinks he learned something.

      1. Steven says:


  4. kdawg says:

    I think Elon’s best line was about incentives not being necessary. He says that many people think they are absolutely necessary or absolutely unnecessary. That is not true. They serve as catalyst to spur the business.

    1. Lensman says:

      Glad someone pointed this out. Thanks, kdawg. As is all too often the case in the world of the modern media, the public is presented two opposing viewpoints as opposite as the news media can get, and let them (often, encourage them) to argue with each other. In theory the truth should come out in the exchange, but quite often it doesn’t, because there is no one presenting the moderate view.

      So yes, Tesla Motors does benefit from government subsidies. It gets more customers because of those subsidies, and therefore the company is growing faster because of them. Would Tesla be able to survive without them? I think so, yes. But it would be growing more slowly that it is.

  5. Bill Howland says:

    CP here had mentiond sometime ago that Tesla couldn’t even be in business excepting the fact that Wall Street likes him. Several bloggers here are also Tesla investors and so must find it painful to find sparse information as to the true profitability of the company.

    Like all other CEO’s, Musk is doing all right for himself personally. Long term performance of the Stock is unknown.

    1. Alonso Perez says:

      Musk is making minimum wage from Tesla. He owns a lot of stock and gets stock options but he never sells so this is all worthless if the long term performance of the stock is poor.

      In other words, Musk won’t do well for himself if Tesla stock does not perform. Musk lives with his income from SpaceX, which is privately held.

      The numbers of the company are clear enough. The strategy is to spend every last dime on capital assets to grow the company as quickly as possible. Every Tesla investor agrees with this strategy and will see it through at least till the Model III is in mass production and beyond.

      1. Nix says:

        Alonso — I agree with your post, but I’l like to add a little bit of an aside about Musk’s stock options.

        Musk does what most every CEO does with their stock options once they go public. They all secure zero or near zero interest rate lines of credit with the banks/investment houses that they use for the company’s corporate banking and to do their IPO. They use their stock options as collateral for their loans, and then use the money from the Line of Credit for whatever they need.

        It is pretty much a standard practice among corporations that go public. It allows CEO’s to completely avoid paying taxes on their stock options, while still having semi-liquid access to part of their value.

        It isn’t anywhere near the only example of that. Another example is people with friendly relationships with banks or investment houses putting up their stock portfolio as collateral for loans at extremely low rates. They do basically the same thing, but with stocks they may have bought decades ago. The interest rates are so low that it is cheaper than paying the taxes on a stock they sell for $200/share that they might have paid $2 dollars for decades ago. When they die, the tax basis is stepped up for the inheritor, so they no longer have to pay taxes on the $198/share capital gains.

    2. Mike777 says:

      Year-over-Year increase in sales of 50%.
      It’s not just Wall Street that likes him.

      He has a long track record of success.
      PayPal, SpaceX and Tesla.

      What we need is More Musk and fewer drunkards like Tillerson.

  6. Nix says:

    Funny how the LA Times article includes this in the money they claim is from the government:

    “The Palo Alto company has also collected more than $517 million from competing automakers by selling environmental credits”

    Including this as if it were part of the “$4.9 billion in government subsidies” is completely false. Not a single penny of that money comes from the government. So including it in this total is a gross misrepresentation.

  7. Lensman says:

    Are Elon Musk’s companies funded by government subsidies?

    Tesla Motors: As noted by kdawg above, subsidies do help, but I think Musk is telling the truth when he says they are not actually necessary for the company to be successful. There seems no doubt, however, that without those subsidies, Tesla would not be growing as fast as it is. I think that it would still be growing, but at a slower rate.

    SolarCity: Financial matters are not my forte, but I am persuaded by articles I’ve read that say SolarCity’s profit margin exists only because of government subsidies. Now, as the price of solar panels (and possibly the cost of installation) continue to drop, it may be that in a few years, SolarCity could eke out a slim profit margin without those subsidies; much slimmer than what they’re operating at now. But I don’t think there’s much question that if those subsidies disappeared tomorrow, SolarCity would fold up its tent.

    SpaceX: It’s a cynical misuse of the term “subsidy” to suggest that any rocket launch company, whether it’s SpaceX or the rocket launch divisions of Lockheed Martin or Boeing, is “subsidized” by the government. Those companies or their divisions get by far the majority of their income from government contract, and certainly they could not afford to develop rocket launch systems unless they were fully funded by government contract.

    It’s this simple: If the USA is going to continue to launch satellites into orbit, and if we want to continue to send astronauts into space, then somebody has to build and operate the launch systems. Calling this a “subsidy” is intellectually dishonest. It’s a government contract. It would be just as silly to say the U.S. Navy is “subsidized” by the Government. It’s not a “subsidy”, it’s funding.

    1. Lensman says:

      As I read back thru my post, I see I overstated my argument about SpaceX. Yes, SpaceX did develop a privately funded rocket launch system, perhaps with little or no government funding, and perhaps they could have made a small to moderate profit launching only commercial satellites. But I don’t think there is any doubt that Musk’s goal all along was to grab one of those lucrative government contracts for heavy launch systems, which in the past have gone only to Lockheed Martin or Boeing. And certainly SpaceX could not afford develop a manned rocket launch system (as it currently is) if they had not been awarded at NASA contract which is funding that development.

  8. Nix says:

    The author’s complete misunderstanding of Tesla is exposed here when talking about Tesla’s plan to follow up the Roadster with a less expensive 2nd model, and then a less expensive 3rd model:

    “In fact, the second model now typically sells for $100,000, and the much-delayed third model, the Model X sport utility, is expected to sell for a similar price.”

    The Model X isn’t Tesla’s 3rd model. It is a Model S variant based on the same model as the model S. The Model III is the third model, built on a completely new 3rd generation chassis.

    This is simply pure revisionist history on behalf of the author of the story. And I’m certain he knows it.

  9. JakeY says:

    They also count all the subsidies for the buyer (not the company itself) which I’m not sure is fair at all (esp. given it makes up a huge proportion of their accounting). By the same method, if they did the same for Nissan, I’m pretty sure they would come out ahead of Tesla in total subsidies.

    And I guess it should be put out there that given they are valuing the ATVM loan at 10%, Ford’s $5.9 billion loan, would be worth $590 million alone by their accounting.

  10. MDEV says:

    What about the agricultural subsidies? This people is amazing I think they wish Tesla were from China and then worshipping them for changing the world. My Tax money subsidies, Schools, Churches, Banks, Oil, Agriculture, Medicaid “for a lot of people that don’t needed” and politicians pork. I’m happy with Tesla using my share to do something for humanity.

    1. Mister G says:

      I can’t think of one industry that does not get government subsidies directly or indirectly.

  11. Lensman says:

    Bill Howland said:

    “CP here had mentiond sometime ago that Tesla couldn’t even be in business excepting the fact that Wall Street likes him.”

    That was B.S. when CP said it, and you repeating it doesn’t make it any less so.

    “Several bloggers here are also Tesla investors and so must find it painful to find sparse information as to the true profitability of the company.”

    Perhaps you need to look up the words “blog” and “blogger”. Posting comments here doesn’t make one a “blogger”.

    I’m not an investor, but there was an article not so long ago right here on InsideEVs which detailed just how much money Tesla is getting from carbon credits. As I recall, eliminating that would require Tesla to make up the difference by adding about $7k or $8k to the price of a Model S. As I said, that would slow sales a bit, but likely not much in a car which has an average selling price of about $100k.

    1. Bill Howland says:

      You’re ‘right’. Just because I’ve spent $109,000 plus tax, etc. still doesn’t give me the right to offer an opinion. I should keep silent while the big experts (accordint to themselves) with no skin in the game say stuff.

      1. ModernMarvelFan says:

        Bill, haven’t you got the memo that you can’t say anything negative against Tesla in front of Tesla fan club? You have to worship Tesla in a holy way…

        Didn’t you get the memo? I am constantly being reminded of that on the internet daily…

        1. Bill Howland says:

          Yeah, and this wasn’t a negative comment in any event. He’s been somewhat complementary to me in the past(but only because the wind was blowing the wrong way, i.e. too many others were agreeing with me),but he is mistaken more than 50% of the time, especially on technical details. But this forum suits him well since he can just continue frothing at the mouth and criticizing people without offering any proof of his own.

          Enough about that type. You getting a 2016 volt? I like my 2014 ELR, (supposedly the 2016 elr will *NOT* have the volt’s improvements, but just software changes and optional sportier suspension, and brakes – before they discontinue it – presumably the PHEV ct6 will pick up the slack). – Alex on Autos did a pretty good review ofit, although one mistake I caught was he said it didn’t have LRR tires which my model, having the ‘standard’ tires does. I like the ‘opened up ‘ battery on the ELR. Yesteday, with admittedly light pedal driving, I got 53.6 miles without the engine running. Can’t get better than the low 40’s in my 2011 volt. But it seems to be substantially built, and AlexonAutos liked it also, even at $79,000 which I paid $49,750 (eg: a perfect swap for the $50k roadster). Everyone who buys an ELR ‘pays’ what I do, so its about the price of an I3.

          1. ModernMarvelFan says:

            2016 Volt sounds nice, but I will be driving my 2012 Volt for a long time. It got 44K miles now and I will be driving it long past 100K miles…

            Maybe a 3rd Generation Volt or maybe even a Tesla Model3 if Tesla can do what it claims in terms of range/performance/price.

            I am really wishing for a Plugin Equinox…

      2. Lensman says:

        Bill Howland said:

        “You’re ‘right’. Just because I’ve spent $109,000 plus tax, etc. still doesn’t give me the right to offer an opinion. I should keep silent while the big experts (accordint to themselves) with no skin in the game say stuff.”

        Are we supposed to be impressed because you’ve got a lot of money? You must be one of the 1%, with that sense of entitlement.

        I don’t care how much money someone posting to the Internet has. I do care if they’re sharing real facts and information, and attempting to get to the Truth, rather than just spouting off on a subject they haven’t bothered to learn about.

  12. PVH says:

    I see nothing wrong with subsidizing a starting industry if done cleverly. Norway’s good EV sales number is due to tax subsidies (or lack of taxes on EV’s which is the same), same in France, same in the Netherlands and in many other countries. EV’s needs that, there would be lot less sales without those subsidies and sales are already quite poor as they are now with subsidies. With growing numbers of EV’s on the road the technology will become cheaper then subsidies can be stopped. Same thing took place with PV panels.

  13. Leptoquark says:

    Megamerger? Why would Tesla want to buy Fiat/Chrysler? Actually, getting rid of it’s CEO comes to mind…..

  14. Assaf says:

    Gotta love the “I’m only reporting facts and he’s getting emotional” spin by the LA-Times hack.

    It takes a politician to push such BS with a straight face.

    Oh wait, he’s not a politician he’s a journalist. Or is he?

    1. Nix says:

      I especially like how the journalist sounds extra butt-hurt and emotional when he says that.

      If his story withstands scrutiny all by itself, he wouldn’t need to respond to criticism and he could let the story speak for itself. But it doesn’t, so he is acting out of emotion to try and defend it.

      1. Assaf says:

        I don’t mind ppl expressing emotions

        I do mind ppl lying, obviously at the service of certain business interests – and then pretending it’s “factual” and “objective”, and what are the persons affected by their lies getting all worked up about.

  15. EVer says:

    same s*** every time, the bad guys always trying to make the good guys look bad

  16. Conservative Wizards of Oz... says:

    …tell you to stop paying attention to that man behind the curtain when it comes to subsidies for oil, roads, airports, big business, church, etc.

    But they huff and puff and threaten to blow your house down when it comes to electric cars and solar power.

    “those darn hippies…”

  17. Ocean Railroader says:

    I don’t mind this for Tesla. Considering we are subsidizing the Middle East with tens if not hundreds of billions of dollars so they can buy more bullets and guns with our oil money.

    I’m right now happy with Space X getting a few billion dollars in that they have held up their deal of delivering stuff to the International space station. Also Elon Musk is building a moon rocket that will be ready in a year or two while NASA is going to take another ten years for Orion which will be useless at the rate Tesla is going at.

  18. martinwinlow says:

    Surely what we should all be commenting on (and applauding) is that Mr Musk, his companies and US employees are leading the world in technological innovation – and exports – again. At the same time the media should be reminding everyone of just how much public money has been spent (and is still being spent) on propping up a bloated, archaic and corrupt auto industry and its equally ghastly bed-fellow, Big Oil!

  19. Mister G says:

    Every American gets a government subsidy…what’s the point of this LA times article?